A wide range of carbon isotope values in the Devonian fossil Prototaxites has been interpreted to support heterotrophy and the classification of Prototaxites as a giant fungus. This inference remains controversial because of the huge size of Prototaxites relative to co-occurring terrestrial vegetation and the lack of existing fungal analogues that display equally broad isotopic ranges. Here, we show wide isotopic variability in the modern saprotrophic fungus Arrhenia obscurata collected adjacent to shallow meltwater pools of a sparsely vegetated glacial succession in the Washington Cascades, USA. Soils collected specifically around the edges of these pools were up to 5‰ higher in d 13C than adjacent soils consistent with C3 origin. Microbial sources of primary production appear to cause these high d 13C values, and the environment may be analogous to that of the Early Devonian landscapes, where Prototaxites individuals with extreme isotopic variance were found. Carbon isotopes are also compared in Prototaxites, Devonian terrestrial vascular plants, and Devonian algal-derived lake sediments. Prototaxites isotopic values show little correspondence with those of contemporaneous tracheophytes, providing further evidence that non-vascular land plants or aquatic microbes were important contributors to its carbon sources. Thus, a saprotrophic fungal identity is supported for Prototaxites, which may have relied on deposits of algal-derived organic matter in floodplain environments that were less dominated by vascular plants than a straight reading of the macrofossil record might suggest.